PEOPLE AND HISTORYMontenegro resisted the rule of the Ottoman Turks, maintaining its independence and playing off its powerful neighbors against each other. Montenegro was recognized as an independent and sovereign principality by the Great Powers of Europe assembled at the Congress of Berlin on July 13, 1878.

During World War I, Montenegro fought on the side of the Allies but was defeated and occupied by Austria. Upon Austrian occupation, the Montenegrin king, King Nikola I, and his government went into exile. In late 1918, an Assembly met in Podgorica, and under the eyes of the Serbian army, deposed King Nikola and declared unification with Serbia. The government of Montenegro in exile denounced the Assembly's action, to no avail. From 1919 to 1941, Montenegro was part of what became known as the Kingdom of Yugoslavia, despite armed resistance in the early 1920s to rule from Belgrade.

When Yugoslavia was invaded and partitioned by the Axis powers in April 1941, Montenegro was appropriated by the Italians under a nominally autonomous administration. While some Montenegrins sided with Italy, motivated by antipathy against past rule from Belgrade, the Partisan Revolt in Montenegro began early, on July 13, 1941, and initially scored impressive successes against the Italian occupiers. Throughout World War II, Montenegro served as an effective base and refuge for Tito's Partisans. After the war, Montenegro was granted the status of a republic within Yugoslavia.

The breakup of the Yugoslav federation after 1989 left Montenegro in a precarious position. Between 1991 and 1992, Slovenia, Croatia, Bosnia and Herzegovina, and Macedonia all seceded from Yugoslavia. On April 27, 1992 in Belgrade, Serbia and Montenegro joined in passing the Constitution of the Federal Republic of Yugoslavia. Though Montenegro reaffirmed its political attachment to Serbia, a sense of a distinct Montenegrin identity continued to thrive. Outspoken criticism of Serbian conduct of the 1992-95 war in Bosnia and Herzegovina boosted the continuing strength of Montenegrin distinctiveness. The government of Montenegro was critical of Yugoslav President Slobodan Milosevic's 1998-99 campaign in Kosovo, and the ruling coalition parties boycotted the September 2000 federal elections, which led to the eventual removal of Milosevic's regime.

In March 2002, the Belgrade Agreement was signed by the heads of the federal and republican governments, setting forth the parameters for a redefinition of Montenegro's relationship with Serbia within a joint state. On February 4, 2003, the F.R.Y. parliament ratified the Constitutional Charter, establishing a new state union and changing the name of the country from Yugoslavia to Serbia and Montenegro. On May 21, 2006, the Republic of Montenegro held a successful referendum on independence and declared independence on June 3.

Serbia, the European Union (EU), and all permanent members of the United Nations Security Council have recognized the Republic of Montenegro's independence. Montenegro joined the Organization for Security and Cooperation in Europe (OSCE) on June 22, 2006 and the United Nations (UN) on June 28, 2006.

GOVERNMENT AND POLITICAL CONDITIONS In January 1998, Milo Djukanovic became Montenegro's President, following bitterly contested elections in November 1997, which were declared free and fair by international monitors. His coalition followed up with parliamentary elections in May 1998. Having weathered Milosevic's campaign to undermine his government, Djukanovic struggled to balance the pro-independence stance of his coalition with the changed domestic and international environment following the North Atlantic Treaty Organization (NATO) bombing campaign in Kosovo. In December 2002, Djukanovic resigned as President and was appointed Prime Minister. The President of Montenegro is Filip Vujanovic, elected in May 2003 after two previous elections were declared void after failing to meet voter turnout requirements. Parliamentary elections are to be held on September 10, 2006.

LegislatureThe Montenegrin Parliament is the lawmaking body of the Government of Montenegro.

DEFENSEThe Montenegrin Government has established a military and a Ministry of Defense. Further reform and transformation of both institutions is underway.

ECONOMYMontenegro has natural resources, primarily bauxite, adequate water supplies, and a climate conducive to agriculture and tourism. The establishment of the bauxite-alumina-aluminum industry after World War II provided Montenegro with a core strategic industry, which has suffered from high production costs since the first energy crisis in 1973. In the 1960s, tourism began its initial growth, largely attracting visitors from eastern Europe. War and sanctions in the early 1990s hit Montenegro hard, and recovery only really began after the end of the Kosovo crisis in 1999 and the adoption of the deutschmark (DM) in November 1999, which largely disconnected Montenegro's economy from Serbia and the Serbian dinar.

During the last few years, Montenegro has created a business-friendly investment climate. The Euro replaced the DM on March 31, 2002. Standard & Poors rates the republic's credit at BB+, and inflation in 2005 was only 1.8%. Almost all banks are privatized, as are 87% of the formerly state-owned businesses and property. Net foreign direct investment (FDI) in 2005 reached $450 million or four times higher than in 2004; investments per capita are $772, the highest in Europe.

Tourism and tourism investments, particularly along the Adriatic coast, are booming. The independent World Travel and Tourism Council has repeatedly ranked Montenegro as the top-growing tourism destination in the world, with growth estimated at 10% annually through 2016.

FOREIGN RELATIONSSince the June 3, 2006 declaration of independence, the European Union, Serbia, and all permanent members of the UN Security Council have recognized Montenegro. The United States recognized Montenegro on June 12 and formally established diplomatic relations on August 15. The UN General Assembly voted on June 28, 2006 to admit Montenegro as a new member state, and Montenegro has indicated its desire to join the EU and NATO. Montenegro is applying for membership in various international organizations, since the union's seats in such bodies were retained by Serbia. Serbia and Montenegro dissolved their union peacefully, and both countries have stated intentions to maintain close political, economic, and cultural ties.

Foreign AidThere are currently a variety of U.S. assistance programs in place in Montenegro to help improve the economic climate and strengthen democracy. These include initiatives to prepare the country for World Trade Organization (WTO) accession and to promote local economic growth and business development.

U.S.-MONTENEGRO RELATIONSThe United States maintained a consulate in Podgorica during Montenegro's union with Serbia. It currently manages the U.S. diplomatic presence in Montenegro.

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